Optional cargo clause

Optional cargo clause. In a time charterparty, such as in the New York Produce Exchange form, the vessel is

“… to be employed, in carrying lawful merchandise, including petroleum or its products, in proper containers, excluding .. . (vessel is not to be employed in the carriage of Live Stock, but Charterers are to have the privilege of shipping a small number on deck at their risk, all necessary fittings and other requirements to be for account of Charterers), in such lawful trades.”

Such a clause seems to give the Charterer a fairly wide variety of options as to the cargo the ship can be ordered to carry. However some cargoes are excluded, especially if they are not “lawful”. The modern ASBATIME 1981 tends to be somewhat more specific regarding the options allowed to the Charterer and the exclusions:

β€œ . . . to be employed in carrying lawful merchandise excluding any goods of a dangerous, injurious, flammable or corrosive nature unless carried in accordance with the requirements or recommendations of the proper authorities . . .Without prejudice to the generality of the foregoing, in addition the following are specifically excluded: livestock of any description, arms, ammunition, explosives . . .”

Clauses in a voyage charterparty could also give the charterers or even the shipowners an option to ship cargoes other than those for which the ship is chartered to carry. For example, a clause in the CENTROCON 1914 charterparty designed for the carriage of grain from the River Plate could state: “Charterers have the option of shipping other lawful merchandise . . .” but the freight is still based on the vessel’s carrying capacity for wheat or other grain in bags. Any extra expenses in loading and discharging the optional cargo is for the charterer’s account. ‘This optional cargo clause occurs rather frequently in the carriage of grain where the charterer is given the option to load any or more than one varieties of grain. In the case of Reardon Smith Line v. Ministry of Agriculture, 1963, the ship was chartered to receive a full and complete cargo of wheat in bulk, and/or barley in bulk and/or flour in sacks, and the Charterer had the option of loading up to one-third of barley in bulk and one-third cargo of flour in bags, paying additional freight. In the English House of Lords, it was said that ” `Option’ in its widest interpretation means simply choice or freedom of choice”.

Other rider clauses could give further options to the Charterer. For example, in a time charterparty, a rider clause could state:

“Charterers have the privilege of loading up to 1,000 tons of inflammable and dangerous goods, including acids in proper containers, provided loaded, stowed, secured, discharged in accordance with rules of IMO or United States Coastguard regulations or similar competent authorities.”.

The exercise of the option can also have financial implications for the party exercising it. Examples are: additional freight for different cargo (as above), additional expenses for handling the new cargo and demurrage for delay.

In one case, The Mexico I, 1990, the ship was chartered on a voyage charter to carry 5,000 tonnes of bagged maize from Argentina to a port in Angola, Africa. The shipowners were given the right (an option) to complete the vessel with other lawful merchandise provided such merchandise was absolutely harmless and free from any odour. After loading the original cargo of maize, a further charter was made to carry on board the same ship an additional cargo of 500 tonnes of beans from a different loading port and the charterers were given another option to change the discharging port. The second cargo was loaded and the owners also loaded various cargoes for their own account.

When the ship arrived at the finally agreed discharging port; the original cargo of maize was over stowed by the beans and the owner’s cargo. It did not become accessible for discharge until the over stowed cargoes were discharged. However, before it became fully accessible for discharge, the ship had to temporarily vacate its berth to give priority to another vessel. This additional delay was of eight days. The discharge of the original cargo commenced 31 days after the ship’s arrival. It was held that this was the time when laytime commenced to run for the discharge of the original cargo of maize. Therefore the delay before laytime commenced was for the owner’s account. 


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